“Performance Period” is the
three-year period consisting of FY05, FY06 and FY07

(i)

“ROC” means return on
capital.

2.
Participants: All of the executive officers of the Company, plus Group
Presidents who are not executive officers.

3.
Payouts earned under the Plan depend on the Company’s results during the
Performance Period, as compared to the results of its Peers, for each of the
Performance Measures.

4.
Target awards for each participant are determined by the Committee. Awards are
expressed as a certain number of performance units calculated by dividing the
dollar equivalent of the award by the Company’s June 30, 2004 stock price.

5.
Target awards are weighted as follows for the purpose of determining payouts
for each Performance Measure:

Revenue Growth

20%

EPS Growth

40%

ROC

40%

The payout under the Plan for each Performance Measure
ranges from 0% to 200% of each participant’s weighted target award with 100%
payout set if the Company ranks at the 55th
percentile against its Peers for each Plan Measure. Total Plan payouts are
determined by adding together the payouts for each of the Performance Measures.

LTIP Payout Schedule

Percentile

Ranking

Percentage of Target

Award Paid

£35%

0

%

40%

25

%

45%

50

%

50%

75

%

55%

100

%

60%

125

%

65%

150

%

70%

175

%

³75%

200

%

6.
Payments earned under the Plan will be paid at the end of Performance Period. Except as otherwise provided herein, payment will be made in the
form of a credit to the participant’s account under the EDP.
Payment may be made in restricted stock of the Company pursuant to the
Company’s 2003 Stock Incentive Plan at the discretion of the Committee unless
the participant has previously elected a deferral under the EDP. The number of restricted shares issued will be
equal to the number of performance units earned in accordance with the LTIP
Payout Schedule described above and the restricted shares will be subject to a
vesting schedule and such other terms and conditions determined by the
Committee at the time of issuance. Retirees at the time of payout will receive
cash unless the participant elected a deferral under the EDP prior to retirement. The value of any EDP credit or cash payment will be determined based
upon the value of the earned performance units as of June 30, 2007 based upon
the Company’s stock price at such date.

7.
If a participant dies, retires (with consent of the Committee if earlier than
age 60) or is disabled during the Performance Period, he/she will receive a pro
rata portion of the award payable upon completion of the Performance Period. A
participant who resigns or is otherwise terminated during the Performance
Period forfeits the award.

8.
The Committee retains discretion to adjust (positively or negatively) the level
of payouts earned based upon its assessment of overall Company results.

9.
In the event of a “Change in Control” of the Company, the payout under the Plan
will be accelerated to fifteen (15) days after the Change in Control. The
amount of the payout will be in cash and will be the greater of the target award
or the amount the payout would have been had the Company’s ranking against the
Peers during the Performance Period to the end of the fiscal quarter
immediately preceding the date of the Change in Control continued throughout
the Performance Period. The cash amount of such payout will be based upon the
closing New York Stock Exchange stock price of the Company’s common shares on
the first day of the Performance Period or the date of the Change in Control,
whichever is greater. If the Participant will reach age 65 prior to the end of
the Performance Period, the payout in the event of a Change in Control will be
reduced on a pro rata basis. “Change in Control” means the occurrence of one of
the following events:

(i)

any “person” (as such term is
defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the
“Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the “Company”
representing 20% or more of the combined voting power of the Company’s then
outstanding securities eligible to vote for the election of the Board of
Directors of the Company (the “Board”) (the “Company’s Voting Securities”);
provided, however, that the event described in this paragraph shall not be
deemed to be a Change in Control by virtue of any of the following
situations: (A) an acquisition by the Company or any corporation or entity in
which the Company has a direct or indirect ownership interest of 50% or more
of the total combined voting power of the then outstanding securities of such
corporation or other entity (a “Subsidiary”); (B) an acquisition by any
employee benefit plan sponsored or maintained by the Company or any
Subsidiary; (C) an acquisition by any underwriter temporarily holding
securities pursuant to an offering of such securities; (D) a Non-Control
Transaction (as defined in paragraph (iii)); (E) as pertains to a Plan
participant (the “Executive”), any acquisition by the Executive or any group
of persons (within the meaning of Sections 13(d)(3) and 14(d)(2) of the
Exchange Act) including the Executive (or any entity in which the Executive
or a group of persons including the Executive, directly or indirectly, holds
a majority of the voting power of such entity’s outstanding voting
interests); or (F) the acquisition of Company Voting Securities from the
Company, if a majority of the Board approves a resolution providing expressly
that the acquisition pursuant to this clause (F) does not constitute a Change
in Control under this paragraph (i);

(ii)

individuals who, at the
beginning of any period of twenty-four (24) consecutive months, constitute
the Board (the “Incumbent Board”) cease for any reason to constitute at least
a majority thereof; provided, that (A) any person becoming a director
subsequent to the beginning of such twenty-four (24) month period, whose
election, or nomination for election, by the Company’s shareholders was
approved by a vote of at least two-thirds of the directors comprising the
Incumbent Board who are then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named

as a nominee for
director, without objection to such nomination) shall be, for purposes of this
paragraph (ii), considered as though such person were a member of the Incumbent
Board; provided, however, that no individual initially elected or nominated as
a director of the Company as a result of an actual or threatened election
contest with respect to directors or any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other than
the Board shall be deemed to be a member of the Incumbent Board;

(iii)

the consummation of a
merger, consolidation, share exchange or similar form of corporate
reorganization of the Company or any Subsidiary that requires the approval of
the Company’s shareholders, whether for such transaction or the issuance of
securities in connection with the transaction or otherwise (a “Business
Combination”), unless (A) immediately following such Business Combination:
(1) more than 50% of the total voting power of the corporation resulting from
such Business Combination (the “Surviving Corporation”) or, if applicable,
the ultimate parent corporation which directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect directors of the
Surviving Corporation (the “Parent Corporation”), is represented by Company
Voting Securities that were outstanding immediately prior to the Business
Combination (or, if applicable, shares into which such Company Voting
Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities among the
holders thereof immediately prior to the Business Combination, (2) no person
(other than any employee benefit plan sponsored or maintained by the
Surviving Corporation or the Parent Corporation) is or becomes the beneficial
owner, directly or indirectly, of 20% or more of the total voting power of
the outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving
Corporation), and (3) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation), following the Business Combination, were members
of the Incumbent Board at the time of the Board’s approval of the execution
of the initial agreement providing for such Business Combination (a
“Non-Control Transaction”) or (B) the Business Combination is effected by
means of the acquisition of Company Voting Securities from the Company, and a
majority of the Board approves a resolution providing expressly that such
Business Combination does not constitute a Change in Control under this
paragraph (iii); or

(iv)

the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company and its
Subsidiaries. Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any person acquires beneficial ownership of
more than 20% of the Company Voting Securities as a result of the acquisition
of Company Voting Securities by the Company which, by reducing the number of
Company Voting Securities outstanding, increases the percentage of shares
beneficially owned by such

-4-

person; provided, that if a Change in Control would occur as
a result of such an acquisition by the Company (if not for the operation of
this sentence), and after the Company’s acquisition such person becomes the
beneficial owner of additional Company Voting

Notwithstanding
anything in this Plan to the contrary, if the Executive’s employment is
terminated prior to a Change in Control, and the Executive reasonably
demonstrates that such termination was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to effect a Change
in Control, (a “Third Party”), then for all purposes of this Plan, the date
immediately prior to the date of such termination of employment shall be deemed
to be the date of a Change in Control for such Executive.

-5-

Exhibit A

Cooper
Industries, Ltd.

Cummins
Inc.

Danaher
Corporation

Deere
& Company

Dover
Corporation

Eaton
Corporation

Emerson
Electric Co.

Flowserve
Corporation

Goodrich
Corporation

Honeywell
International Inc.

Illinois
Tool Works Inc.

Ingersoll-Rand
Company Limited

ITT Industries, Inc.

Pall
Corporation

Rockwell
Automation, Inc.

SPX
Corporation

Textron
Inc.

York
International Corporation

-6-

EX-10.(M) 3 dex10m.htm
2003 STOCK INCENTIVE PLAN

Exhibit 10(m)

PARKER-HANNIFIN CORPORATION 2003 STOCK INCENTIVE PLAN

1.

Purpose.

The 2003 Stock Incentive Plan is intended to help
maintain and develop strong management through ownership of Shares of the
Corporation by key employees of the Corporation and its Subsidiaries and for recognition
of efforts and accomplishments which contribute materially to the success of
the Corporation’s business interests.

2.

Definitions.

In this Plan, except where the context otherwise
indicates, the following definitions apply:

(c) “Change in Control” means the occurrence of one of
the following events:

(i)
any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act
and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing 20% or
more of the combined voting power of the Corporation’s then outstanding
securities eligible to vote for the election of the Board (the “Corporation’s
Voting Securities”); provided, however, that the event described in this
paragraph shall not be deemed to be a Change in Control by virtue of any of the
following situations: (A) an acquisition by the Corporation or any Subsidiary;
(B) an acquisition by any employee benefit plan sponsored or maintained by the
Corporation or any Subsidiary; (C) an acquisition by any underwriter
temporarily holding securities pursuant to an offering of such securities; (D)
a Non-Control Transaction (as defined in paragraph (iii)); (E) as pertains to
an individual Grantee, any acquisition by the Grantee or any group of persons
(within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
including the Grantee (or any entity in which the Grantee or a group of persons
including the Grantee, directly or indirectly, holds a majority of the voting
power of such entity’s outstanding voting interests); or (F) the acquisition of
Corporation Voting Securities from the Corporation, if a majority of the Board
approves a resolution providing expressly that the acquisition pursuant to this
clause (F) does not constitute a Change in Control under this paragraph (i);

(ii)
individuals who, at the beginning of any period of twenty-four (24) consecutive
months, constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority thereof; provided, that (A) any person becoming a director
subsequent to the beginning of such twenty-four (24) month period, whose
election, or nomination for election, by the Corporation’s shareholders was
approved by a vote of at least two-thirds of the directors comprising the
Incumbent Board who are then on the Board (either by a specific vote or by
approval of the proxy statement of the Corporation in which such person is
named as a nominee for director, without objection to such nomination) shall
be, for purposes of this paragraph (ii), considered as though such person were
a member of the Incumbent Board; provided, however, that no individual
initially elected or nominated as a director of the Corporation as a result of
an actual or threatened election contest with respect to directors or any other
actual or threatened solicitation of proxies or consents by or on behalf of any
person other than the Board shall be deemed to be a member of the Incumbent
Board;

(iii)
the consummation of a merger, consolidation, share exchange or similar form of
corporate reorganization of the Corporation or any Subsidiary that requires the
approval of the Corporation’s stockholders, whether for such transaction or the
issuance of securities in connection with the transaction or otherwise (a
“Business Combination”), unless (A) immediately following such Business
Combination: (1) more than 50% of the total voting power of the corporation
resulting from such Business Combination (the “Surviving Corporation”) or, if
applicable, the ultimate parent corporation which directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation (the “Parent Corporation”), is
represented by Corporation Voting Securities that were outstanding immediately
prior to the Business Combination (or, if applicable, shares into which such
Corporation Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Corporation
Voting Securities among the holders thereof immediately prior to the Business
Combination, (2) no person (other than any employee benefit plan sponsored or maintained
by the Surviving Corporation or the Parent Corporation) is or becomes the
beneficial owner, directly or indirectly, of 20% or more of the total voting
power of the outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation), and (3) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation), following the Business Combination, were members of the
Incumbent Board at the time of the Board’s approval of the execution of the
initial agreement providing for such Business Combination (a “Non-Control
Transaction”) or (B) the Business Combination is effected by means of the
acquisition of Corporation Voting Securities from the Corporation, and a
majority of the Board approves a resolution providing expressly that such
Business Combination does not constitute a Change in Control under this
paragraph (iii); or

(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or the sale or other
disposition of all or substantially all of the assets of the Corporation and
its Subsidiaries. Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any person acquires beneficial ownership of
more than 20% of the Corporation Voting Securities as a result of the
acquisition of Corporation Voting Securities by the Corporation which, by reducing
the number of Corporation Voting Securities outstanding, increases the
percentage of shares beneficially owned by such person; provided, that if a
Change in Control would occur as a result of such an acquisition by the
Corporation (if not for the operation of this sentence), and after the
Corporation’s acquisition such person becomes the beneficial owner of
additional Corporation Voting Securities that increases the percentage of
outstanding Corporation Voting Securities beneficially owned by such person, a
Change in Control shall then occur.

Notwithstanding anything in this Plan to the contrary,
if a Grantee’s employment is terminated prior to a Change in Control, and the
Grantee reasonably demonstrates that such termination was at the request of a
third party who has indicated an intention or taken steps reasonably calculated
to effect a Change in Control (a “Third Party”), then for all purposes of this
Plan, the date immediately prior to the date of such termination of employment
shall be deemed to be the date of a Change in Control for such Grantee.

(d) “Code” means the Internal Revenue Code and the
regulations promulgated thereunder, as in effect from
time to time.

(e) “Compensation and Management Development
Committee” or “Committee” means the committee of the Board so designated. The
Committee will be constituted in a manner that satisfies all applicable legal
requirements, including satisfying any independence standard contained in the
listing requirements of the New York Stock Exchange.

(g) “Designated Beneficiary” means the person
designated by the Grantee of an Award hereunder to be entitled, on the death of
the Grantee, to any remaining rights arising out of such Award. Such
designation must be made in writing and in accordance with such regulations as
the Committee may establish.

(h) “Detrimental Activity” means activity that is
determined in individual cases, by the Committee or its express delegate, to be
detrimental to the interests of the Corporation or a Subsidiary, including
without limitation (i) the rendering of services to
an organization, or engaging in a business, that is, in the judgment of the
Committee or its express delegate, in competition with the Corporation; (ii)
the disclosure to any one outside of the Corporation, or the use for any
purpose other than the Corporation’s business, of confidential information or
material related to the Corporation, whether acquired by the Grantee during or
after employment with the Corporation; (iii) fraud, embezzlement,
theft-in-office or other illegal activity; or (iv) a violation of the
Corporation’s Code of Ethics.

(i) “Dividend Equivalent Right,”
herein sometimes called a “DER,”
means the right of the Grantee thereof to receive, pursuant to the terms of the
DER, credits based on the cash
dividends that would be paid on the Shares specified in the DER if such shares were held by the grantee, as
more particularly set forth in Section 10(a) below.

(j) “Eligible Employee” means an Employee who is an
officer, or in a managerial, executive, technical, professional, or other key
position as determined by the Committee.

(k) “Employee” means an employee of the Corporation or
one of its Subsidiaries.

(l) “Exchange Act” means the Securities Exchange Act
of 1934, as amended from time to time.

(m) “Fair Market Value” in relation to a Share as of
any specific time shall mean the closing price as reported for the New York
Stock Exchange—Composite Transactions on such date, or if no shares are traded
on that date, the next preceding date on which trading occurred.

(n) “Grantee” means a recipient of an Award under this
Plan.

(o) “Incentive Stock Option,” herein sometimes called
an “ISO,” means a stock option meeting all of the requirements of Section 422
of the Code or any successor provision.

(p) “Insider” means a person subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to equity
securities of the Corporation.

(q) “Restricted Stock” means any Share issued with the
restriction that the Grantee may not sell, transfer, pledge, or assign such Share
and such other restrictions (which may include, but are not limited to,
restrictions on the right to vote or receive dividends) which may expire
separately or in combination, at one time or in installments, all as specified
by the Award.

(r) “Rule 16b-3” means Rule 16b-3 (or any successor
thereto) under the Exchange Act that exempts from Section 16(b) of the Exchange
Act transactions under employee benefit plans, as in effect from time to time
with respect to this Plan.

(s) “Share” means a common share, par value $.50, of
the Corporation issued and reacquired by the Corporation or previously
authorized but unissued.

(t) “Stock Appreciation Right,” herein sometimes
called an “SAR,” means the right of the Grantee thereof to receive, pursuant to
the terms of the SAR, a number of Shares or cash or a combination of Shares and
cash, based on the increase in the value of the number of Shares specified in
the SAR, as more particularly set forth in Section 8 below.

(u) “Stock
Option” means the right of the Grantee thereof to acquire a number of Shares
upon payment to the Corporation of the exercise price specified in the Award.

(v) “Subsidiary” means any corporation, partnership,
or other entity in which the Corporation, directly or indirectly, owns a 50
percent or greater equity interest.

(w) “Terminate” or “Termination” means cease to be an
Employee, except by death, but a change of employment from the Corporation or
one Subsidiary to another Subsidiary or to the Corporation shall not be
considered a termination.

(x) “Terminate Normally” for
an Employee participating in this Plan means to Terminate:

(i) as a result of retirement under
the applicable retirement plan or policy of the Corporation or a Subsidiary,

(ii) as a result of that Employee becoming eligible for
disability income under the Corporation’s long-term disability Plan, or

(iii)
with written approval of the Committee given in the context of recognition that
all or a specified portion of the outstanding Awards to that Employee will not
expire or be forfeited or annulled because of such Termination and, in each
such case, without being Terminated for cause.

The selection of eligible Employees to receive Awards
will be within the discretion of the Committee. More than one Award may be
granted to the same eligible Employee. Members of the Committee are not
eligible for the grant of Awards.

4.

Administration.

(a) The Committee shall administer this Plan. The
Committee will, subject to the terms of the Plan, have the authority to (i) select the eligible Employees who will receive Awards;
(ii) grant Awards; (iii) determine the number and types of Awards to be granted
to Employees; (iv) subject to the terms of the Plan, determine the terms,
conditions, vesting periods and restrictions applicable to Awards; (v) adopt,
alter and repeal administrative rules and practices governing this Plan; (vi) interpret
the terms and provisions of this Plan and any Awards granted under this Plan;
(vii) prescribe the forms of any notices of Awards or other instruments
relating to Awards; and (viii) otherwise supervise the administration of this
Plan. All decisions by the Committee will be made with the approval of not less
than a majority of its members.

(b) All
determinations and interpretations pursuant to the provisions of this Plan
shall be binding and conclusive upon the individual Employees involved and all
persons claiming under them.

(c) With respect to Insiders, transactions under this
Plan are intended to comply with all applicable conditions of Rule 16b-3. To
the extent any provision of this Plan or any action by the Committee under this
Plan fails to so comply, such provision or action shall, without further action
by any person, be deemed to be automatically amended to the extent necessary to
effect compliance with Rule 16b-3, provided that if such provision or action
cannot be amended to effect such compliance, such provision or action shall be
deemed null and void, to the extent permitted by law and deemed advisable by
the appropriate authority. Each Award to an Insider under this Plan shall be
deemed issued subject to the foregoing qualification.

(d) Except as otherwise determined by the Committee,
an Award under this Plan is not transferable other than by will or the laws of
descent and distribution and is not subject, in whole or in part, to attachment,
execution, or levy of any kind.

(e) Any rights with respect to an Award granted under
this Plan existing after the Grantee dies are exercisable by the Grantee’s
Designated Beneficiary or, if there is no such Designated Beneficiary who may,
and does, lawfully do so, by the Grantee’s personal representative.

(f) Except as otherwise provided herein, a particular
form of Award may be granted to an eligible Employee either alone or in
addition to other Awards hereunder. The provisions of particular forms of Award
need not be the same with respect to each recipient.

(g) The Committee may delegate any of its authority to
any other person or persons that it deems appropriate, provided the delegation
does not cause the Plan or any Awards granted under this Plan to fail to
qualify for the exemption provided by Rule 16b-3 or violate any independence
standard contained in the New York
Stock Exchange listing requirements.

(h) This Plan and all action taken under it shall be
governed by the laws of the State of Ohio
without giving effect to the principles of conflict of laws thereof.

(i) The Committee may permit
or require any Grantee to exercise any Stock Options or SARs
by means of electronic signature.

(j) Each Award shall be evidenced in such form
(written, electronic or otherwise) as the Committee shall determine. Each Award
may contain terms and conditions in addition to those set forth in the Plan.

5.

Awards That May Be
Granted.

(a) The aggregate number of
Shares that may be delivered (i) upon the exercise of
a Stock Option or SAR; (ii) as Restricted Stock and released from a substantial
risk of forfeiture thereof; or (iii) in payment of DERs,
subject to adjustment as provided in the Plan, is equal to the

sum
of (A) 9,000,000; plus (B) the amount of any Shares that are not delivered to
an Employee by reason of (1) the expiration, termination, cancellation or
forfeiture of an award under the 1993 Program; and (2) the tendering or
withholding of Shares to satisfy all or a portion of the exercise price or tax
withholding obligations relating to Shares issued or distributed under an award
under the 1993 Program.

(b) The aggregate number of Shares that may be issued
upon exercise of ISOs is 3,000,000.

(c) The aggregate number of Shares of Restricted Stock
that may be issued hereunder is 5,000,000.

(d) To the extent that Shares subject to an
outstanding Award are not delivered to a Grantee by reason of the expiration,
termination, cancellation or forfeiture of such Award or by reason of the
tendering or withholding of Shares to satisfy all or a portion the tax
withholding obligations relating to an Award, then such Shares shall not be
deemed to have been delivered for purposes of determining the maximum number of
Shares available for delivery under the Plan. If the exercise price of any
Stock Option granted under the Plan is satisfied by tendering Shares (by actual
delivery or attestation), only the number of shares issued to the participant
net of the Shares tendered shall be deemed to be delivered for purposes of
determining the maximum number of Shares available for delivery under the Plan.
When an unexercised Award lapses, expires, terminates or is forfeited, the
related Shares may be available for distribution in connection with future
Awards. If the benefit provided by any Award is paid in cash, any Shares
covered by the Award will be available for distribution in connection with
future Awards.

(e) The assumption of Awards granted by an
organization acquired by the Corporation, or the grant of Awards under this
Plan in substitution for any such Awards, will not
reduce the number of Shares available for the grant of Awards under this Plan.

6.

Adjustments.

In the event that the Committee shall determine that
any (a) stock dividend, stock split, combination of Shares, recapitalization or
other change in the capital structure of the Corporation, or (b) merger,
consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of rights or
warrants to purchase securities, or (c) other corporate transaction or event
having an effect similar to any of the foregoing affects the Shares of the
Corporation such that an adjustment is required in order to preserve the
benefits or potential benefits intended to be made available under this Plan,
then the Committee shall, in its sole discretion, and in such manner as the
Committee may deem equitable, adjust any or all of (i)
the number and kind of Shares which thereafter may be the subject of Awards
under this Plan, (ii) the number and kind of Shares subject to outstanding
Awards, and (iii) the exercise price with respect to any of the foregoing.
Moreover, in the event of any such transaction or event, the Committee, in its
discretion, may provide in substitution for any or all outstanding Awards under
this Plan such alternative consideration as it, in good faith, may determine to
be equitable in the circumstances and may require in connection therewith the
surrender of all Awards so replaced.

7.

Stock Options.

(a) One or more Stock Options may be granted to any
eligible Employee. No Employee may be granted Stock Options for more than
1,000,000 Shares in any three-year period. Each Stock Option so granted shall
be subject to such terms and conditions as the Committee shall impose. The
exercise price per Share shall be specified by the Award, but shall in no
instance be less than 100 percent of Fair Market Value at the time of the
Award. Payment of the exercise price shall be made in cash, Shares, or other
consideration, or any combination thereof, in accordance with the terms of this
Plan and any applicable regulations of the Committee in effect at the time and
valued at Fair Market Value on the date prior to exercise of the Stock Option.
All Stock Options granted hereunder shall have a maximum life of no more than
ten (10) years from the date of issuance of the Award. In no event shall any
Stock Option vest sooner than one (1) year from date of issuance of the Award
except in the event of a Change in Control.

(b) Stock Options granted hereunder may be designated
as ISOs (except to the extent otherwise specified in
this Section7) or nonqualified Stock Options. ISOs
may be granted only to Eligible Employees which meet the definition of
“employees” under Section 3401(c) of the Code. To the extent that the aggregate
Fair Market Value of Shares with respect to which Stock Options designated as ISOs are exercisable for the first time by any Grantee
during any year (under all plans of the Corporation and any Subsidiary thereof)
exceeds $100,000, such stock options shall be treated as not being ISOs. ISOs and Awards thereof
must comply with all of the requirements of Section 422 of the Code.

(c) The Committee shall not adjust or amend the
exercise price of Stock Options previously awarded to any Grantee, whether through
amendment, cancellation and replacement grant, or any other means.

(d) The Committee may grant reload Stock Options,
separately or together with another Stock Option, pursuant to which, subject to
the terms and conditions established by the Committee, the Grantee would be
granted a new Stock Option when the payment of the exercise price of a
previously granted Stock Option is made by the delivery of Shares owned by the
Grantee, which new Stock Option would be an option to purchase the number of
Shares not exceeding the number of Shares so provided as consideration upon the
exercise of the previously granted Stock Option to which such reload Stock
Option relates. Reload Stock Options may be granted with respect to Stock
Options previously granted under the Plan or any other Stock Option plan of the
Corporation. Reload Stock Options shall have a per Share exercise price equal
to the Fair Market Value as of the date of grant of the reload Stock Option.
Any Reload Option shall be subject to availability of sufficient Shares for
grant under the Plan.

8.

Stock Appreciation
Rights.

(a) An SAR may be granted to
an eligible Employee as a separate Award hereunder. No Employee may be granted SARs for more than 1,000,000 Shares in any three-year
period. Any SAR shall be subject to such terms and conditions as the Committee
shall impose, which shall include provisions that (i)
such SAR shall entitle the Grantee, upon exercise thereof in

accordance
with such SAR and the regulations of the Committee, to receive from the
Corporation that number of Shares having an aggregate value equal to the excess
of the Fair Market Value, at the time of exercise of such SAR, of one Share
over the exercise price per Share specified by the Award of such SAR (which
shall in no instance be less than 100 percent of Fair Market Value at the time
of the Award) times the number of Shares specified in such SAR, or portion
thereof, which is so exercised.

(b) Any Stock Option granted under this Plan may
include an SAR, either at the time of the Award or by amendment. An SAR
included in a Stock Option shall be subject to such terms and conditions as the
Committee shall impose, which shall include provisions that

(i) such SAR shall be exercisable
to the extent, and only to the extent, the Stock Option is exercisable; and

(ii)
such SAR shall entitle the Grantee to surrender to the Corporation unexercised
the Stock Option in which the SAR is included, or any portion thereof, and to
receive from the Corporation in exchange therefor
that number of shares having an aggregate value equal to the excess of the Fair
Market Value, at the time of exercise of such SAR, of one Share over the
exercise price specified in the Award of such Stock Option times the number of
Shares specified in the Award of such Stock Option, or portion thereof, which
is so surrendered.

(c) All SARs granted
hereunder shall have a maximum life of ten (10) years from the date of issuance
of the Award. In no event shall any SAR vest sooner than one (1) year from the
date of issuance of the Award except in the event of a Change in Control.

(d) In lieu of the right to receive all or any
specified portion of such Shares, an SAR may entitle
the holder thereof to receive the cash equivalent thereof as specified by the
Award.

(e) An SAR may provide that such SAR shall be deemed
to have been exercised at the close of business on the business day preceding
the expiration of such SAR or the related Stock Option, if any, if at such time
such SAR has positive value and would have expired.

9.

Restricted Stock.

(a) An Award of Restricted Stock may be granted
hereunder to an eligible Employee for such consideration, if any, as may be required
by applicable law. The terms and conditions of Restricted Stock, including the
vesting period, shall be specified by the Committee, at its sole discretion, in
the Award. In no event shall any Restricted Stock vest sooner than three (3)
years from the date of the issuance of the Restricted Stock except, to the
extent specified in the Award, (i) in the event of a
Change in Control; (ii) upon the death of the Grantee; or (iii) if the Grantee
Terminates Normally.

(b) Any Shares of Restricted Stock issued hereunder
may be evidenced in such manner as the Committee in its sole discretion
shall deem appropriate, including, without limitation, book-entry registration
or issuance of a stock certificate or certificates. In the event any stock
certificate is issued in respect of shares of Restricted Stock awarded
hereunder, such certificate shall bear an appropriate legend with respect to
the restrictions applicable to such award.

(c) The grant of any Award of Restricted Stock may be
conditioned upon the achievement of performance-based criteria. Further, any
Award of Restricted Stock may specify performance-based criteria which, if
achieved by the Corporation, will result in termination or early termination of
the restrictions applicable to such Shares.

10.

Dividend Equivalent
Rights; Interest Equivalents.

(a) A DER
may be granted hereunder to an eligible Employee, as a component of another
Award or as a separate Award. The terms and conditions of DERs
shall be specified by the Award. Dividend Equivalents Rights credited to the
Grantee of a DER may be paid
currently or may be deemed to be reinvested in additional Shares (which may
thereafter accrue additional Dividend Equivalents Rights). Any such
reinvestment shall be at Fair Market Value at the time thereof. DERs may be settled in cash or Shares or a combination
thereof, in a single installment or installments. A DER
granted as a component of another Award may provide that such DER shall be settled upon exercise, settlement, or
payment of, or lapse of restrictions on, such other Award, and that such DER shall expire or be forfeited or annulled under
the same conditions as such other Award. A DER
granted as a component of another Award may also contain terms and conditions
different from such other Award.

(b) Any Award under this Plan that is settled in whole
or in part in cash on a deferred basis may provide by the Award for interest
equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the Award.

11.

Deferral of Payment.

With the approval of the Committee, the delivery of
Shares, cash or any combination thereof subject to an award may be deferred,
either in the form of installments or a single future delivery. The Committee
may also permit or require selected Grantees to defer payment of some or all of
their Awards, as well as other compensation, in accordance with procedures
established by the Committee to assure that recognition of taxable income is deferred under the Code.

12.

Termination of
Employment.

If the employment of a Grantee terminates for any reason,
all unexercised, deferred and unpaid Awards may be exercisable and paid only as
specified in the Award and in accordance with rules established by the
Committee. These rules may provide, as the Committee deems appropriate, subject
to the terms of the Plan, for the expiration, continuation, or acceleration of
the vesting of all or part of the Awards.

13.

Detrimental Activity.

The Committee may cancel any unexpired, unpaid or deferred
Awards at any time if the Grantee is not in compliance with all applicable
provisions of this Plan or with the terms of any notice of Award or if the
Grantee engages in Detrimental Activity. The Committee may, in its discretion
and as a condition to the exercise of an Award, require a Grantee to
acknowledge that he or she is in compliance with all applicable provisions of
the Plan and of any notice of Award and has not engaged in any Detrimental
Activity. Any Award may provide that if a Grantee, either during employment by
the Corporation or within a specified period after termination of such
employment, shall engage in any Detrimental Activity, and the Committee shall
so find, forthwith upon notice of such finding, the Grantee shall:

(a) return to the Corporation, in exchange for payment
by the Corporation of any amount actually paid therefor
by the Grantee, all Shares that the Grantee has not disposed of that were
issued pursuant to this Plan within a specified period prior to the date of the
commencement of such Detrimental Activity; and

(b) with respect to any
Shares so acquired that the Grantee has disposed of, pay to the Corporation in
cash the difference between:

(i) any amount actually paid
therefore by the Grantee pursuant to this Plan; and

(ii) the Fair Market Value of such Share on the date of such
acquisition.

To
the extent that such amounts are not paid to the Corporation, the Corporation
may set off the amounts so payable to it against any amounts that may be owing
from time to time by the Corporation to the Grantee, whether as wages, deferred
compensation or vacation pay or in the form of any other benefit or for any
other reason.

14.

Change in Control.

The Committee may in its discretion and upon such
terms as it deems appropriate, either in the Award or subsequent thereto,
accelerate the date on which any outstanding Stock Option or SAR becomes
exercisable or waive the restrictions or other terms and conditions on the
vesting of any Restricted Stock in the event of a Change in Control or proposed
Change in Control of the Corporation. In addition to the foregoing, the
Corporation may, with the approval of the Committee, purchase Stock Options
previously granted to any Grantee who is at the time of any such transaction an
Employee of the Corporation for a price equal to the difference between the
consideration per Share payable pursuant to the terms of the transaction
resulting in the Change in Control and the exercise price specified in the
Award.

15.

Substitute Awards.

The Committee may grant Awards in substitution for, or
upon the assumption of, Awards granted by another corporation that is merged
into, consolidated with, or all or a substantial part of the assets or stock of
which is acquired by the Corporation or a Subsidiary. The terms and provisions
of any Awards granted under this Section 15 may vary from the terms and
provisions otherwise specified in this Plan and may, instead, correspond to the
terms and provisions of the awards granted by the other corporation.

16.

Amendments to This
Plan; Amendments of Outstanding Awards.

(a) The Board may from time to time amend or terminate
this Plan, or any provision hereof, provided, however, approval of the
shareholders of the Corporation will be required to the extent necessary to
comply with Rule 16b-3 or any other applicable law, regulation, or stock
exchange listing requirement, or to qualify for an exemption or
characterization that is deemed desirable by the Board.

(b) The Committee may, in its discretion, subject to
the terms of the Plan, amend the terms of any Award, prospectively or
retroactively, but no such amendment may impair the rights of any Grantee
without his or her consent. The Committee may, in whole or in part, subject to
the terms of the Plan, waive any restrictions or conditions applicable to, or
accelerate the vesting of, any Award.

17.

Withholding Taxes.

The Corporation shall have the right to deduct from
any cash payment made under this Plan any federal, state or local income or
other taxes required by law to be withheld with respect to such payment. It
shall be a condition to the obligation of the Corporation to deliver Shares
upon exercise of a Stock Option or SAR, upon settlement of a DER, upon delivery of Restricted Stock, or upon
exercise, settlement, or payment of any other Award under this Plan, that the
Grantee of such Award pay to the Corporation such amount as may be requested by
the Corporation for the purpose of satisfying any liability for such
withholding taxes. Any Award under this Plan may provide by the Award that the
Grantee of such Award may elect, in accordance with any applicable regulations
of the Committee, to pay a portion or all of the
amount of such minimum required or additional permitted withholding taxes in
shares. The Grantee shall authorize the Corporation to withhold, or shall agree
to surrender back to the Corporation, on or about the date such withholding tax
liability is determinable, shares previously owned by such Grantee or a portion
of the shares that were or otherwise would be distributed to such Grantee
pursuant to such Award having a Fair Market Value on the day prior to the date
such payment is made equal to the amount of such required or permitted
withholding taxes to be paid in Shares.

18.

Grants of Awards to
Employees Who are Foreign Nationals.

Without amending this Plan, but subject to the
limitations specified in Section 16 above, the Committee may grant, amend,
administer, annul, or terminate Awards to eligible Employees who are foreign
nationals on such terms and conditions different from those specified in this
Plan as may in the judgment of the Committee be necessary or desirable to
foster and promote achievement of the purposes of this Plan.

19.

Rights of Employees.

Nothing in this Plan will confer upon any Grantee the
right to continued employment by the Corporation or limit in any way the
Corporation’s right to terminate any Grantee’s employment at will.

20.

Effective Date.

This Plan was approved by the Board on August 14, 2003
and will become effective when approved by the shareholders of the Corporation.
Upon approval of the Plan by the Shareholders of the Corporation, no further
Awards may be made by the Corporation under the 1993 Program.